What is insurance coverage?
Insurance coverage refers to the amount of risk or liability that is covered for an individual party or entity, by way of insurance services offered. Insurance coverage, such as third party liability, auto insurance coverage, or life insurance coverage, is issued by insurers in the event of any unforeseen occurrences such as a car collision or premature death.
Insurance coverage can help consumers recover any financial loss incurred by unexpected events (e.g., a natural disaster, car theft, or a loss of income). The insured party must pay an insurance premium to the insurance company in exchange for this coverage. The coverage and costs involved are determined by a wide variety of factors.
In essence, premiums are a way for the insurance company to manage financial risk on its part. When there is an increased possibility that the insurance company will have to pay out money toward a claim, they can offset that risk by charging a higher premium. When they do this with multiple insured parties, they can ensure that they have enough money to cover unfortunate events where an accident occurs and one of their clients requires a payout.
Most insurers will charge higher insurance premiums for young male drivers as, statistically speaking, they are the most likely to be involved in an accident that may lead to bodily injury or third party liability, as opposed to a middle-aged married woman with years of driving experience under her belt.
What are the different types of insurance coverage?
1. Car insurance coverage
Auto insurance coverage, or car insurance coverage, is a type of protection that keeps you covered in the event of an accident or car collision on the road. Drivers are required to have the minimum amount of liability auto insurance coverage at the very least. This includes bodily injury liability coverage and property damage liability coverage.
Bodily injury liability, or third party liability, refers to the medical expenses of any other involved parties who may have been injured because of you.
Property damage liability covers any damages to someone else’s property when you were at fault.
Depending on where you live, you may also be required to have further insurance, such as:
- Comprehensive coverage
- Car collision coverage
- Medical coverage
- Personal accident coverage
Auto insurance coverage premiums generally depend on your (the driver’s) driving record. If you have a record free of any accidents, you will typically be able to secure a lower insurance premium.
If, however, you have a history of accidents, you will likely have to pay a much higher insurance premium to cover the increased risk of bodily injury or third party liability.
Similarly, mature drivers tend to have fewer accidents than new drivers and as such, drivers below the age of 25 tend to be charged more.
Drivers who take their car to work or regularly drive long distances will also pay more for auto insurance coverage due to the increased mileage and an increased likelihood of a car collision. Those who do not drive very much invariably pay less.
Another consideration is higher rates of property damage or vandalism in urban areas. Drivers who live in cities tend to pay higher premiums than people living in smaller towns and rural areas.
2. Home insurance
Home insurance or property insurance refers to a type of protection that covers financial losses associated with any incidents involving your home and property. As an example, the typical home insurance coverage will cover the following property damage:
- Arson (fire)
- Lightning damage
- Heavy winds
With a homeowner’s policy in place, you can pay for repairs to your home, or in the most extreme circumstances, rebuild it.
Home insurance coverage can also be used to pay to replace lost or damaged belongings, as well as to replace or repair any structures associated with your property (e.g., your garage).
Homeowner’s insurance premiums can vary depending on the total value of your home and where your home is located. As an example, you may be required to pay higher premiums in areas that are more likely to be hit by a natural disaster such as flooding.
3. Life insurance coverage
Life insurance coverage refers to the type of protection that can provide financial security for your loved ones and dependents should you pass away prematurely. With such a policy you are tasked with naming a beneficiary (someone who will be responsible for your assets and estate), or multiple beneficiaries to receive a death benefit in the event that you should pass away.
Term life insurance is a type of coverage that provides protection for a set period of time. For example, you can choose a 20 or 25-year term policy.
Permanent life insurance covers you for as long as you are paying your monthly premiums (e.g., lifetime coverage). Another benefit of permanent life insurance coverage is that you can often build a cash value over time that you could borrow against in the event you encounter financial troubles.
Permanent life insurance coverage types include:
- Whole life
- Universal life
- Variable life
- Variable universal life
With each of these life insurance types (both term or permanent), you can choose the total death benefit that you would like your beneficiaries to receive (e.g., ฿1,000,000 and beyond).
Term life coverage tends to offer lower insurance premiums as you will only be covered for a set period of time.
Premiums for life insurance coverage can vary depending on the age and gender of the insured party. As younger people are less likely to die, they will typically pay a lower insurance premium, while women also typically pay lower insurance premiums because they tend to live longer than men.
Engaging in risky behaviors, such as a dangerous hobby or using drugs and alcohol, can result in a higher insurance premium as well.
The health of the insured party is also a key factor in calculating the premium costs. Those who are in good health will pay less. As an example, those with a 30-year policy have a greater risk of death than those with a 10-year policy.
If you have a history of chronic illness or any other pre-existing conditions, such as hereditary heart disease or cancer, it may also result in a higher insurance premium.
Smokers, drinkers, and people suffering from obesity will also be much more likely to pay a higher premium. When applying for life insurance coverage the applicant will go through a thorough medical examination in order to determine any signs of high blood pressure or other signs of risk that may result in an increased likelihood of premature death.
In addition to life insurance, it is worth considering other types of insurance to ensure you are covered in the case of an unforeseen event, including health insurance coverage, cancer insurance coverage, fire insurance coverage, and medical insurance coverage.
Where to compare insurance rates?
You can compare insurance coverage and premiums by checking your quote on our website or visiting our friends at MrKumka.com After answering a few questions, you will see suggested insurance coverages, premiums, and add-on options.
Why is insurance coverage important?
Having insurance coverage gives you confidence in every situation. Choose a trustworthy insurance company, and in case of accident, please contact your agent to receive assistance.
What is considered full insurance coverage?
In case of car insurance, full coverage might consist of third party liability, comprehensive coverage and collisions. Home insurance coverage might include coverage against fire, theft, vandalism, lightning damage, hail, heavy winds, floods.
Which insurance coverage is required by law?
The compulsory motor insurance in Thailand or “Por Ror Bor” is required by law. The coverage of compulsory car insurance is very limited, so it is suggested to purchase additional voluntary insurance. Home insurance isn’t required by law, however, natural disasters like flooding are common in Thailand. Regarding life insurance coverage, in Thailand it is not required, however, strongly suggested to have life insurance coverage.
Can insurance cover plastic surgery, dental services, and LASIK?
General plastic surgeries, dentist services, and LASIK are not covered by insurance. However, if it is needed after an accident, it might be covered by your insurance provider.
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